Beware the dodgy bookkeeper

Did you know that if your accountant or bookkeeper makes errors on your accounts that HMRC will blame only one person? YOU!!

I thought long and hard about whether to post about my recent experience with what I can only describe as a ‘rogue’ bookkeeper - but whilst I will not name and shame - I do want to warn everyone to not take certain things for granted. 

The results of her incompetence have led to my being taken to hospital with a suspected heart attack (fortunately a panic attack) and I have spent the last 13 days working 18 hour days to rectify the huge number of errors that have been made. I am physically and emotionally exhausted – and I have been paying throughout for this privilege.

Last year I posted in 4N that I was looking for a bookkeeper. Several people applied but one stood out.

She seemed highly capable, very switched on, was originally a trained accountant, had won an award for her work and, in conversation, was just totally on the ball. She seemed to get how important it is to keep a good track of accounts.

A few years ago, I had a bad experience with another bookkeeper who made such a mess of my accounts that I had to delete my Sage accounts and start from scratch – this later led to VAT issues which I had to sort out. This new bookkeeper totally understood how hard this was for me to sort out last time and empathised and assured me that it wouldn’t happen again with her at the helm. She would take away the pain of bookkeeping and enable me to get on with growing the business.

I thought I'd learned a lesson - clearly not.

This new bookkeeper charged me regularly each month, didn't seem to need much help - just the odd nominal code or invoice query – and was generally very helpful and friendly on the phone.

My accountant ran management reports in August 2018 and all seemed well. Profit was looking as expected - costs didn't seem out of line - although I did comment that my manufacturing bills seemed a bit low and was told that they were going to be in the next VAT quarter. No problem I thought.

Come the end of the financial year (mine runs Jan-Dec) my accountant started making noises about getting all the information together for the end of year accounts.  There was no real response from the bookkeeper and I assumed that I was the one holding things up as I hadn’t done my share of sales invoicing yet.

As a matter of protocol I went through the invoices from my manufacturer (as they are pretty immense) and noticed that there were still quite a few missing – despite my having flagged this up in August and provided all the invoices in our online shared folder.  I thought this was a bit odd and started to dig.

And boy did I dig up a big old pile of  ****.

It seemed that many of my regular monthly invoices hadn’t been entered since early 2018 (when she’d taken over), ￡10,000 worth of DHL shipments were unentered (I ship a lot worldwide and spend around ￡2k a month). My advertising costs were missing. 

To make matters worse, even the items that had been entered had been entered incorrectly.  My monthly O2 mobile phone bill (was partially missing) but when it was in was rated as T0 (which means outside of the scope of VAT). Hands up if you think that you won’t be paying VAT on a phone bill?

The accounting system I use is Sage - and this was the system this bookkeeper was using via my account. Imagine my surprise to see the monthly cost as NOT being entered since July 2018. And to see some entries as vat-rated and some as not. It seemed any random tax code would do!

Numbers had been input wrong. Dates were wrong. And it was clear from the audit trail on the system that the work that although there was an invoice sent and paid for in early October that there had been no actual bookkeeping work logged in September or early October. The same in January when no work had occurred in December. And she'd paid herself without sending me an invoice for an extra amount.

So you might (rightly) be thinking – well aren’t you an idiot not to be checking in regularly on every single element of your accounts.  But I was busy trying to build and grow my business and had trusted that the person who seemed so switched on and so qualified was actually doing the job that I was paying her for. And she was clearly doing enough work to make the P&L look like I was active. 

She used a whizzy app for me to put my miscellaneous receipts through – all seemed so efficient – until I checked on those receipts and despite my saying exactly where they should go they were sitting in my director’s loan account.

Also by putting so much through as T0 it wouldn’t impact my VAT returns in a way that could be punishable as I was not claiming VAT I wasn’t entitled to – I just wasn’t claiming the VAT back. I had queried that my claim back seemed low and been told it would be rectified in a later VAT return as it just missed the last one.

I have spent the last 15 days working from sometimes as early as 2am until late at night to go through and check every single transaction that she entered in 2018.  I have had to work all the way through my time with my daughter at half term (I share custody).

To date there has been around a 70% error rate. Fortunately I am quite proficient with Sage. Fortunately I have a lovely former bookkeeper who has been an angel and sat with me helping me create calm from the chaos.

So, long story short, please please please don’t be me. 

If you have a bookkeeper or accountant doing your day-to-day accounts – take a moment once a month to make sure your bank accounts and credit cards are reconciled. Make sure your purchase invoices are up to date. A monthly sanity check means you won’t be sitting like me 8 months on swirling in the mess created by a fraud.

If you regularly do due diligence then you can smugly smile and think what a prat I must have been.  

If you don’t, please take the time to check on what is being done. HMRC will only hold YOU accountable, no one else.

This has been a horrific experience and I wouldn’t wish it on anyone so I am sharing to help encourage you all to be on the ball so you never have to go through what I have.